Top-rated Montgomery County sells GOs

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Montgomery County, Md., came to market on Wednesday with a triple-A-rated general obligation bond offering.

Primary market
Montgomery County competitively sold $330 million of consolidated public improvement GOs of 2018, Series A.

Citigroup won the bonds with a true interest cost of 3.2796%.

Proceeds will be used to refinance certain commercial paper bond anticipation notes, which financed capital projects in the county.

The financial advisor is Davenport & Co. and the bond counsel is McKennon Shelton.

The deal is rated triple-A by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings.

Since 2008, the county has sold over $5.5 billion of debt with the most issuance occurring in 2017 when it offered $857 million of bonds. It sold the least amount of debt in 2008 when it issued about $340 million.
In the negotiated sector, JPMorgan Securities priced San Antonio’s $217.06 million of new series of 2018 electric and gas systems revenue refunding bonds.

The deal is rated Aa1 by Moody’s, AA by S&P and AA-plus by Fitch.

JPMorgan priced the Tarrant County Cultural Educational Facilities Finance Corp., Texas’ $443.35 million of Series 2018AB revenue and refunding bonds for Christus Health on Tuesday. The deal is rated A1 by Moody’s and A-plus by S&P.

On Thursday, Barclays Capital is expected to price the Phoenix Civic Improvement Corp.’s $230 million of Series 2018 senior lien airport revenue bonds subject to the alternative minimum tax. The deal is rated Aa3 by Moody’s and AA-minus by S&P.

In the short-term competitive sector, the Chicago Board of Education is selling $200 million of Series 2018A tax anticipation notes on Thursday. Financial advisors are PFM Financial Advisors and Columbia Capital Management; the bond counsel are Ice Miller and Pugh Jones Johnson.

Bond sale results

Maryland
Click here for the Montgomery County sale

Texas
Click here for the Tarrant County deal

Click here for the San Antonio deal

Bond Buyer 30-day visible supply at $6.18B
The Bond Buyer's 30-day visible supply calendar decreased $1.83 billion to $6.18 billion for Wednesday. The total is comprised of $1.97 billion of competitive sales and $4.21 billion of negotiated deals.

Secondary market
Municipal bonds were stronger on Wednesday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields fell as much as one basis point in the one- to 30-year maturities.

High-grade munis were also stronger, with yields calculated on MBIS' AAA scale falling as much as two basis points across the curve.

Municipals were mixed on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation remaining unchanged while the yield on 30-year muni maturity dropped as much as one basis point.

Some strength in Treasuries gave municipals a little lift on Wednesday, as new issues continued to price, municipal sources said.

“The municipal market is firm this morning, although not quite keeping up with Treasury market strength,” Alan Schankel, managing director of credit strategy at Janney Capital Markets said Wednesday morning. “t was no surprise that ICI reported $1.4 billion of muni fund outflows for the week ended October 17, confirming Lipper’s outflow data from last week,” he added.

Treasury bonds were stronger as stocks traded lower.

On Tuesday, the 10-year muni-to-Treasury ratio was calculated at 85.3% while the 30-year muni-to-Treasury ratio stood at 99.6%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.

Previous session's activity
The Municipal Securities Rulemaking Board reported 42,053 trades on Tuesday on volume of $12.52 billion.

California, New York and Texas were the municipalities with the most trades, with the Golden State taking 14.192% of the market, the Empire State taking 12.26% and the Lone Star State taking 10.09%.

Treasury sells 2-year FRNs
The Treasury Department Wednesday auctioned $19 billion of two-year floating rate notes with a high discount margin of 0.045%, at a 0.045% spread, a price of par. The bid-to-cover ratio was 3.32.

Tenders at the high margin were allotted 88.76%. The median discount margin was 0.040%. The low discount margin was 0.020%.

The index determination date is Oct. 22 and the index determination rate is 2.300%.

Gary Siegel contributed to this report.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Ziad Saba at 212-803-6079 for more information.

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Primary bond market Secondary bond market Montgomery County City of San Antonio, TX Tarrant County Cultural Education Facilities Finance Corp., TX Phoenix Civic Improvement Corporation Board of Education of the City of Chicago
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